Cardinal Health 3PL: How title model services bring new drugs to market faster 1

How 3PL title model services bring new drugs to market faster

Case study

In the pharmaceutical world, speed-to-market is essential to success. But as mergers and acquisitions continue to increase across the industry, there is a roadblock: companies are acquiring new and innovative products while still in the process of obtaining the state licenses required to distribute them.

Rather than waiting months (or even a year1) to meet licensing requirements in every state, many pharmaceutical companies are taking a more creative approach — leveraging the title model program of a third-party logistics (3PL) provider to mitigate the licensing barrier.

An example of where this approach worked well was for one start-up pharmaceutical company, a newly-created division of a global organization ready to expand operations into the US. Through this new division, the first drug to be introduced to the American market was a recently acquired injectable oncology therapy. Although the drug was ready for distribution in the U.S., the start-up company had yet to obtain the necessary state licenses.

To proceed, the company could have leveraged the distribution capabilities of the drug’s developer, a major pharmaceutical company. While this approach would solve the distribution challenge immediately, the cost warranted the exploration of an alternative — the title model solution.

The company hired a consultant to conduct an RFP review of leading 3PL title model providers, and Cardinal Health Specialty Solutions was chosen for the ability to lower distribution costs by 16 percent — while being flexible and adaptable to the company’s operational needs.

As a result, the start-up company distributed the drug five months faster than would have been possible had it waited for state licensing approval. By taking this speed-to-market approach, the company was able to serve more cancer patients while generating cash flow right away.

A small start-up company introducing a new oncology

therapy to the U.S.

Launched

5

months faster

Lowered distribution costs

16%

Accelerating market access for a start-up pharmaceutical company

What is the Cardinal Health Title Model Program and how did it make the difference for this start-up company and its patients?

Cardinal Health Specialty Solutions

2 Cardinal Health 3PL: How title model services bring new drugs to market faster

The Cardinal Health Title Model Program takes ownership of a drug product when all of the client’s required state licenses are not yet in place. By taking title and closing the licensing gap, Cardinal Health can help the client bring the product to market and start generating revenue faster.

Cardinal Health handles warehousing, distribution and order-to-cash management on the client’s behalf. The pharmaceutical company’s customers make payments to a lockbox managed by Cardinal Health, who sends the pharma company a single invoice each month for title model services.

Once state licenses are in place and product ownership reverts to the client, Cardinal Health serves as a traditional 3PL and continues timely and cost-effective delivery of the product. This transition occurs seamlessly, eliminating confusion in the marketplace.

After Cardinal Health was selected as a vendor, they assumed ownership of inventory, so it could be delivered to several major specialty distributors immediately.

“Cardinal Health was flexible enough to arrange the payment schedule that worked best for us,” said the start-up company’s Vice President of Global Supply Chain, Manufacturing and Quality. “They were ready to do what’s best for our patients and us. Given that we’re a small start-up company, the way Cardinal Health tailored the solution and was so accommodating was absolutely amazing. I’m a team of one, so the overall network, reach and knowledge of Cardinal Health are invaluable to me.”

Cardinal Health also leveraged the GPO contract that the start-up company had in place and passed its pricing advantages on to the company’s customers.

More than a licensing strategy alone, the start-up company benefited from several additional resources. One was the power of data analytics.

“We had real-time access to what was happening with our business, including who was buying, sales trends and inventory levels,” the company’s Vice President of Global Supply Chain, Manufacturing and Quality said. “So we could share this information with our sales representatives.” He explained that while there was ample industry data available, “It may be 45 days behind. The data we received from Cardinal Health was in real time.”

The start-up company tapped into the regulatory expertise of Cardinal Health as well. “When we had questions about specific state licenses, we received timely answers and knew what to do next,” the Vice President said. “The Cardinal Health team was very experienced.” By taking advantage of the comprehensive capabilities of Cardinal Health, this company gained efficiencies, reducing the number of service providers they had to manage.

The title model program was particularly efficient for managing accounts receivable and payable management. “It was very clear and helpful having just a single invoice. For this particular drug, we were delivering to only a small number of specialty distributors. The one-invoice benefit would be even more helpful if distributing to more customers. For example, if you were selling directly to consumers. In that case, the title model program would also be extremely beneficial from a collections management standpoint.”

Flexibility is the key

Gaining deeper value

Because every manufacturer’s needs are different, the Cardinal Health Title Model Program is built to be customizable; there’s no template.

The inspiration for this flexibility is at the heart of healthcare itself: getting the drug to market faster and delivering the right product, to the right patient, at the right time.

“Given that we’re a small start-up company, the way Cardinal Health tailored the solution and was so accommodating was absolutely amazing. I’m a team of one, so the overall network, reach and knowledge of Cardinal Health are invaluable to me. ”

Vice President, Global Supply Chain, Manufacturing and QualityStart-up Pharmaceutical Company

Closing the gap

3cardinalhealth.com/pharma3PL | 888.438.2673

While the start-up company chose to convert to a traditional 3PL relationship with Cardinal Health after the necessary state licenses were obtained, there is another option.

“One aspect of title model programs for pharmaceutical companies to consider is the point when you have a decision to make: should you stay in the program after securing your licenses, or move to a traditional 3PL model?” the start-up company’s Vice President said. “You can weigh that decision based on the amount of revenue you expect to generate and what it would cost your company to handle the title model services that your 3PL provides.”

The advantages are clear• Bring product to market faster —

before state licenses are in place — by transferring product ownership (title) to your 3PL

• Free up cash flow to reinvest in your business

• Mitigate accounts receivable risk

• Deliver a consistent customer experience with branded invoices, web portals and customer service phone lines

• Gain full visibility and transparency of sales and inventory via real-time analytics

• Reduce product expirations and improve inventory management with just-in-time distribution

• Help ensure drug availability via warehousing in multiple locations

Thinking strategically

Learn more about title model opportunities for your organization: Call 888.438.2673 or visit cardinalhealth.com/pharma3PL

Cardinal Health handles warehousing, distribution and order-to-cash managment on the client’s behalf, making it possible to generate revenue faster.

References1“Getting Products to Market Fast with the 3PL Title Model.” Pharmaceutical Commerce. November/December 2015. cardinalhealth.com

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Learn more about title model opportunities for your organization: Call 888.438.2673 or visit cardinalhealth.com/pharma3PL

About Cardinal Health Specialty SolutionsCardinal Health Specialty Solutions partners with healthcare providers and pharmaceutical manufacturers to ensure patients have access to the therapies they need. From supporting manufacturers on the path to successful drug commercialization, to delivering the products providers need and the efficiencies they want, we use our expertise to help improve specialty care.

Cardinal Health Specialty Solutions has managed more than $2 billion in title model programs, supported by comprehensive order-to-cash services.